Bid for Tooth as investment

Press, 24 March 1988, Page 34

Bid for Tooth as investment

i ■ I NZPA-AAP Adelaide Petersville Sleigh’s takeover bid for Tocith and Co. is an investment opportunity, not a streamlining exercise, accordihg to Adelaide Steamship Co. finance director, Mr Michael Kent. Adsteam is the parent in a complex web of cross shareholdings knitting it together - with Tod h, Petersville and David Jones, Ltd. The structure of the web is expected to be altered by Petersvi le's sAust696 million (5NZ779.5M) bid and SAust99M rights issue, but is not likely to be made much simpler;' . Petersville is 49.4 per cent owned by Tooth -in which Adsteam holds ; a! direct 40.5 per cent stake’ and a further 15 per cent indirectly through its! 47 per cent owned retail| associate, David Jopes, Ltd. Analysts say the offer will probably result in a delisting of Tooth, aireduction of Adsteam’s holding in Tooth by about half to around 20 per cent and a 35 per cent stake in Tooth for Petersville, i )'

David. Jones, which,is| underwriting the [ rights! issue,| could end up with! 11 per cent of Petersville; in the .event of a short-: fall. ' • ' X . | 1

I “Everyone's saying this; | deal is aimed at stream-! : lihing ! the group,;’’ Mrj.l Kent I said. “But I we’ve ■ nbver said it | was aid streamlining. If that’s! i what we had intended by I ; doing this, we would have! niade a mess of | it. I“I think you [have !to| look at ;this as a transaction. Everyone’s trying; very-hard to work out the! whys and wherefores, but : they're missing . the fact! that it! just happens to. be j al very good investment.”' [ .Th'el bid i is likely ; toM result 'in a delisted Tooth! remaining asj afi separate entity, owned about 20 per | cent by Adsteam, 44 per;, cent by David Jones and. I 35.5 per cent by Peters-:; ville. .- II

j Mr Kent dismissed: suggestions that leaving! Tooth • separate would lessen the benefits ofrhatched interests. I “A closer “.relationship; obviously does facilitate; co-operation," he said. | ' The Petersville offer is;

I J - L - ; ' J lf3r|9ooc a share. I Adsteam has not yet; said if it will accept the: offer for its 40 per-cent stake !in Tooth, ” but! analysts estimate it could; make ;a profit of about; jISOM-if it offloaded half:, the! holding. | When it reported an 8.9 per; Cept drop in interim; profit to 568.37 M earlier Ithisi month Adsteam said I future profits from sale of ibng-term investments Kvould! no longer be [treated as extraordinary! litems. X

! ! This suggests that Adsteam’s .full year results’will be boosted if it does; take a profit on the sale of part of the Tooth holding. I The. call for streamlining! of, the Adsteam empire gathered strength after a small profit increase; of 7 per cent for Tooth and a 4 per cent drop for Petersville Sleigh, which . some analysts said were disappointing. ! Blit Mr Kent said shifting: : assets “from one pocket to another” had potential traps in the form of capital gains tax liability-! ? : ■ :'. ' ,